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Shaktikanta Das named ‘Central Banker of the Year 2020’; how RBI Governor dealt with challenges in banking sector

India’s banking sector has been faced with many challenges.

, ET Bureau|
Last Updated: Feb 04, 2020, 12.48 PM IST
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(Text: ET Bureau/Apoorva Puranik)
Everyone has a different idea of freedom. Take a look at how these personalities have taken inspiration from the concept. (Text: ET Bureau/Apoorva Puranik)
The Financial Times-owned magazine The Banker named Reserve Bank of India (RBI) governor Shaktikanta Das as the ‘Central Banker of the Year 2020’, Asia-Pacific. The citation lauded Das for bringing in measures to regulate shadow banking through a restrained approach.

India’s banking sector has been faced with many challenges including financial fraud and the rise in non-performing loans. A fall in demand, accompanied by slowing economic growth saw the RBI cut interest rates five times in the past year, with Das stating that is open to further rate cuts, if necessary.

The Banker also credited Das for tackling issues within the financial system by adopting a strategy that will reduce the dependence of lenders on the central bank. “Lenders outside the traditional bank network have been placed under greater levels of scrutiny. Housing finance companies have been brought under the regulation of RBI and will adhere to the same rules framework of non-bank finance companies,” it said.

The Banker also credited Das for tackling issues within the financial system by adopting a strategy that will reduce the dependence of lenders on the central bank.
The Banker also credited Das for tackling issues within the financial system by adopting a strategy that will reduce the dependence of lenders on the central bank.

The RBI has also been instrumental in empowering smaller banks that have a presence in pockets of the country. “As the threat from newer micro-finance institutions looms, Das moved to help the country’s urban co-operative banks install a robust IT system that will allow them to offer banking services at a lower cost and with safeguards to protect the customer,” the magazine said.

Recognition for Das comes at a time when India’s economy is facing severe scrutiny. Inflation has steadily risen even as industrial output has slumped, prompting fears of stagflation. Das has been previously spoken about the lack of governance in banking.

He has also been vocal about the need to rehabilitate state-owned lenders, which have been a laggard on the banking sector owing to their pile of bad loans. In an attempt to make train officials raise red flags in the system, the central bank is planning to set up a college that will train staff to improve their supervisory skills.

These sessions will be available throughout the years, and are designed to keep officials abreast on the latest developments in banking and technology. The Banker also commended the RBI for instructing banks to offer benchmark-linked lending rating.

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